Have you ever been in a negotiation situation where you quickly ended up in a bargaining position where you talk about a few areas such as price and volume. And you feel that your flexibility is limited in the negotiation. What goes wrong is that you lose the phases of the negotiation.
When we negotiate, regardless of whether it is a short negotiation or a long one, we need to consider that the negotiation consists of a number of different phases.
Each phase has a specific purpose - if we skip a phase, this will affect the negotiation. This applies regardless of whether you are a seller or a buyer.
The negotiation phases are
Introduction
Exchange information
Bargaining
Agreement
1. Introduction
In this phase, it is important to focus on cooperation. Why are we here? What are our goals? How can we build a good negotiation climate? An important component is to find a common ground - that is, a common higher purpose that goes beyond this particular negotiation.
If we lose sight of building a common foundation together, there is a risk that one or both parties will become short-sighted in their thinking and actions. The risk of stagnation and deadlock increases.
It is important to spend time on this and to plan in advance before the negotiation. It's hard to shoot from the hip and get it right.
2. Exchange information
The purpose of this phase is to build your strengths, find your opponent's weaknesses and set up fences for certain areas. We already start here to convince that our solution/value has the right commercial terms or it doesn't (depending on whether you are a buyer or a seller).
From a seller's perspective, it is usually desirable to want to have several so-called negotiable areas. This increases flexibility in bargaining - by being able to exchange with each other. These areas need to become clear and discussed through in this phase.
We want to build ourselves strong before the auction. This phase is incredibly important if we are to make a good bargain. If we have the power on our side when bargaining begins, we have the opportunity to find a win-win solution that is better for us than the other party.
3. The auction
In bargaining, you need to send strong messages. You have established these strong messages in the phase before. Your proposal is a 5 year contract due to the reasons you talked about in the exchange of information. Your price is reasonable - something that you also established in the phase before.
In the bargaining process, you also need to work on exchange and conditions. It is therefore important that there are negotiable areas to use. If only price and volume exist, flexibility in the negotiation will be limited.
A challenge for sellers is that buyers often jump right into this phase. It is then important that the seller reverses the tape and starts with phase 1 - find common ground and then move on to phase 2 and so on. If you do this, you increase your flexibility to carry out a successful and effective negotiation.
4. Agreement
The last phase is the easiest! Yes sometimes it can be like that but sometimes we miss some important parts. Perhaps the most important and most obvious. Have we agreed? Sometimes when the discussion goes back and forth with different areas, there can sometimes be misunderstandings.
Summing up in ALL parts at the end is crucial.
In addition to this, it can be positive to show emotions.
How happy I am that we have reached the finish line. Are you also satisfied with what we have come up with?
Another part to also plan in the next step. When the contract is written. What does implementation look like? When will we meet next time?
Good luck with the negotiations.
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